Shyamal Kumar Sen, J.

1. IN this application under Section 256(1) of the Income-tax Act, 1961, the following questions have been referred to this court for determination :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that payment of Rs. 10 lakhs to Messrs. Octavius Steel and Co. Ltd. under the agreement dated March 10, 1983, was capital in nature and hence was not admissible as a revenue expenditure ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming the disallowance of litigation expenses of Rs. 1,05,019 claimed by the assessee as revenue expenditure ?"

2. THE facts leading to the reference, inter alia, are that the year of assessment involved is 1982-83. The assessee is a non-resident company having its head office in the U. K. and was carrying on the business of cultivation and manufacture of tea in India and sale thereof in and outside India. It has no other branch in any other country except its head office in the U. K. The assessee-company entered into an agreement dated December 17, 1975, to sell its Coombergram Tea Estate to Messrs. Octavius Steel and Co.